When will the net profit of unprofitable pharmaceutical companies such as Junshi and Consino turn positive? Will you be de-marketed?

2021，1，，，、，？

。

202134，-U2020，，，2021，ADC。

“”，2021“”，：，？

，127《》：41“，。

01 ？

As of January 31, 2021, there are 7 biomedical companies listed on the fifth set of standards on the Science and Technology Innovation Board, namely Zejing Pharmaceutical, Biotech, Shenzhou Cell, Junshi Bio, Kangsino, Frontier Bio and Iris.

According to statistics, among the 7 companies, the largest loss in 2019 is Junshi Bio, with a deduction of non-net profit of -780 million yuan and R&D expenses of 950 million yuan; the smallest loss is Cansino, with a deduction of non-net profit of -1.

In fact, according to the fifth set of rules of the Science and Technology Innovation Board, “companies in the pharmaceutical industry must have at least one core product approved for phase II clinical trials”, which means that the core products of these seven companies are currently undergoing at least phase II clinical trials.

"We have already achieved Phase II clinical trials at the time of listing.

Take Junshi Biologics as an example.

It is true that the risk of delisting will not occur, and the difference between the company's R&D investment and product sales revenue cannot be compared solely.

While the domestic MAH system is gradually being liberalized and the rules are constantly being improved, authorization income or milestone income may become Biotech's main source of income.

Let's look at Junshi Bio, which has the highest market value and the highest R&D cost among these 7 companies.

The only commercialized product of Junshi Biological currently is Teriprizumab.

On February 1, 2021, Junshi Biosciences announced that it has reached a cooperation with Coherus BioSciences, a US company, on the development and commercialization of Tereprezumab in the United States and Canada.

In addition, in May 2020, Junshi Biological announced that Eli Lilly was granted an exclusive license to carry out R&D activities, production and sales of Junshi new crown antibodies outside of Greater China.

Junshi Bio's 2019 financial report shows that during the reporting period, R&D investment was 946 million yuan, a year-on-year increase of 75.

02 Is it easy to license out?

So, what about the other six?

"Biotech's core competitiveness is one: the products developed are not powerful, and they are not in place.

According to the publicly disclosed R&D investment in 2019, in addition to Junshi Bio's 946 million yuan, followed by Biotec's 640 million yuan.

At the end of February, Biotech announced its 2020 performance report.

According to the 2020 H1 financial report of Biotech, in addition to adalimumab biosimilars, two other Biotech products have been submitted for marketing applications and have been accepted by the CDE.

In addition, three other products have entered phase III clinical trials, namely tocilizumab biosimilar BAT1806, golimumab biosimilar BAT2506, and trastuzumab even-linked drug BAT8001.

It is worth noting that, also in February, Biotech announced that the company decided to terminate the clinical trial of BAT8001 because it did not meet the predetermined target.
As of December 2020, the BAT8001 R&D project has invested a total of 226 million yuan.
Biotech's R&D investment in 2019 is 640 million yuan, and H1 R&D investment in 2020 is 245 million yuan.

It is equivalent to the current commercialization of Biotech's products, almost all of them are biosimilars.
An industry investor believes, "It is difficult for companies doing biosimilars to obtain overseas license out income.
"

At home, risks are also coming quietly.
On January 29, 2021, the State Council Information Office held a briefing on the "Opinions on Promoting the Normalized and Institutionalized Development of Centralized and Volume Procurement of Drugs", and finally clarified that biosimilars will be included in centralized procurement as a foregone conclusion.
Huachuang Securities pointed out in the research report, “Although the barriers of biosimilar CMC are high and the potential market space is huge, as the expected expansion of volume purchases to biosimilars continues to intensify, industry enthusiasm will fall sharply.
”

Biotech’s only commercial product, adalimumab biosimilar, is also facing greater competition in China.
In addition to the original research and study of Merlot, there are three domestic competitors Fuhong Henlius, Xinda Biologicals, and Hisun Pharmaceuticals.
The indications of adalimumab biosimilar drugs from Fuhong Henlius and Hisun Pharmaceuticals are not as good as 100%.
Aotai, but Cinda Bio announced at the end of December that the market value of its adalimumab after the approval of the new indication has reached hundreds of billions, and the impact cannot be underestimated.
However, Huachuang Securities also pointed out in the research report that “after the implementation of large-scale procurement, there will be no more than 10 companies that are truly capable of supplying a basket of biosimilar products at low prices for a long time, and the top players will basically take shape.
”

"The overall quality of unprofitable biopharmaceutical companies on the Sci-tech Innovation Board is not as good as that of Hong Kong stocks.
" The above-mentioned investors are conservative on the current situation of companies listed on the fifth set of standards on the Sci-Tech Innovation Board.
"Junshi Bio may be better.
First of all.
It has PD-1 sales, and the follow-up varieties have the potential of First-in-class, but most of them are Fast-follow.
"

Huang Donglin also believes, "For license out, it depends on how big the satisfaction of clinical needs is.
License out must be based on the epidemiological characteristics of foreign countries and the characteristics of foreign diseases.
"

However, Huachuang Securities believes that “Once domestic biosimilar drugs can enter the European and American markets, it is expected to realize greater income and profit elasticity.
” Past data shows that many large pharmaceutical companies have achieved heavy volume in the European and American biosimilar markets.
At the same time, The price of biosimilar drugs is relatively high in the United States.
Taking pegfilgrastim as an example, the average price of the original research in the United States is US$6,231, and the price of its biosimilar drugs is about US$4,000, with a price difference of only 5%-10 %.

03 Where is the opportunity?

If you consider the worst-case scenario, where are the survival paths of these seven companies?

Li Qiushi believes that there will be some opportunities for mergers and acquisitions.
"Some medium-sized pharmaceutical companies in China have both capital and strong commercialization capabilities.
Then they may strategically invest in these companies or even merge them.
The integration is a win-win situation.
game.
"

In addition, reverse mergers are also possible.
In view of the current low valuation of generic drug companies in the market, Li Qiushi believes that reverse mergers and acquisitions of a traditional generic drug company are also possible.

Huang Donglin also proposed some countermeasures, such as commercial outsourcing of products through authorization.
In fact, such outsourcing cooperation is already underway.

In 2020, Biotech and BeiGene signed an authorization, distribution, and supply agreement to transfer the company’s bevacizumab biosimilar drug BAT1706 related intellectual property rights and its related intellectual property rights in China (including Mainland China, Hong Kong Special Administrative Region, Macau Special Administrative Region) , Taiwan) product rights are licensed to BeiGene with compensation.

At the beginning of 2021, Junshi Bio announced that AstraZeneca will officially obtain the right to promote the anti-PD-1 monoclonal antibody treplimumab independently developed by Junshi Bio in non-core markets in mainland China, and the subsequent approval for listing With the exclusive right to promote urothelial cancer indications nationwide, Junshi Bio will continue to be responsible for the core market promotion of teriplizumab in mainland China except for urothelial cancer indications.

In fact, whether it is merging with traditional generic drug companies or licensing products to companies with stronger commercialization capabilities, innovation and meeting unmet clinical needs are the key to the success of the company, and it is also the final rule set by the China Securities Regulatory Commission.
Goals reached.

"How many products of sci-tech innovation board companies target unmet clinical needs is a big question mark.
For example, China is a large digestive tumor country, and the incidence of gastric cancer and liver cancer is at a high level in the world, but domestic independence in this regard R&D is lacklustre.
If breakthroughs in innovation in this area meet clinical needs, sales will follow, and there will be no problems with commercialization capabilities.
" Huang Donglin said bluntly.